Do Freelancers Need Business Insurance?

The following blog post is a sponsored article by The Ostic Group. The Ostic Group’s mission is to provide all generations with insurance excellence based on integrity and professionalism. The links below are included as part of the sponsorship package.

If you are a freelancer, it is likely you wouldn’t change your working style for the world. It offers you a sense of autonomy and empowers you to work on your own terms, doing something you love. However, freelancing can often come with its own set of questions that would not come up if you were an employee. 

Insurance is one of those questions.

In most cases, commercial insurance plans are not appealing and other types of policies are not comprehensive enough to meet freelancer needs. However, that doesn’t mean you shouldn’t be protected and have peace of mind. 

Insurance for Freelancers

As a freelancer, you are exposed to a unique set of risks and liabilities. The type of service you provide and how you structure your business operations play a large role in what type of business insurance you should consider. 

As a freelancer, your business may become derailed if you are subjected to a large financial burden from a liability claim or property damage. So, consider the following when it comes to choosing if freelancer insurance is right for you.

One of the Most Common Misconceptions

Freelancers often think they are covered for business activities under their homeowners or personal insurance policies. Unfortunately, this is often not the case. 

If you are a freelancer who has clients visiting their home office or property for a business meeting or check-in, then you need to be aware of potential liability. If your client slips or falls, is struck by a falling object or sustains another type of injury on your property your homeowner’s insurance will not cover you because it is related to business activity. Most homeowner’s policies specifically exclude business liabilities.

Outside of liability, freelancers should consider business property coverage in relation to their homeowner’s policy. Most homeowners' policies cover a limited amount of business property such as laptops, cameras or other gadgets related to getting your work done. However, it is more likely than not that the coverage will not be sufficient and you will need to add additional coverage.

As freelancers, your gadgets and technology are often at the heart of doing business. If they are stolen or if disaster strikes, you may no longer have the means to do business or the financial backing to re-buy everything you have worked so hard to acquire. Check your homeowner’s policy or speak to your insurance agent and consider increasing your coverage by adding contents insurance.

If you are a renter who works largely from your home, then review your rental agreement or contact your landlord to find out what is covered. There may be stipulations regarding doing business from a rented space.

Types of Insurance for Freelancers

Business insurance is an essential risk management step. It protects freelancers and other business owners from financial losses originating from events that may occur throughout the course of regular day business activities. 

However, there is no one size fits all business insurance plan. A business insurance plan is typically crafted by adding different policies which are relevant to your day-to-day business activities. An insurance agent will assess your needs and risks to match you with coverage suitable to your freelancing career. Ensure you do your research prior to hiring an insurance agent. Always go for one with a good reputation, credentials and experience dealing with people in your circumstances. 

If you are a freelance you will likely need one or more of the following types of insurance coverage: 

General Liability Insurance

Businesses that are in physical contact with customers or the public will typically need general liability insurance. These types of businesses are bound to a duty of care which means they are responsible for pre-empting any potential issues and solving them before they are in contact with the public. For example, this policy will cover you for financial loss associated with a physical product that is defective or if a customer suffers injuries due to your negligence. 

This is one of the most comprehensive types of insurance policies on the market. It tends to cover you for bodily injury, property damage, or advertising injury.

Professional Liability Insurance

Professional liability insurance (also called errors and omissions insurance) is important for any freelancer or offers a service since it protects you from human error. It will cover you for any legal action resulting from a dissatisfied client. If a client suffers a loss as a result of one of your decisions, they may have grounds for legal action. Everyone makes mistakes or misses deadlines, you don’t want to pay for legal action out of pocket. 

Cyber Insurance

If you are a freelancer, it is likely at least some of your work is performed online. If you deal with any type of sensitive information like credit cards, driver license number, social security numbers and more then it may be necessary to invest in a cyber insurance policy. In doing so, you will be protected from financial losses or liability associated with a lose data, stolen information and more as a result of a cyber attack or breach of security. 

Personal Health Insurance

Personal health insurance and life insurance plans are often overlooked. However they are part of a holistic approach to freelancer and business insurance. Working on your own, you don’t have access to a company medical plan. A personal health insurance policy will help you cut costs on medical and dental. Ensure it also covers disability, in the event the worst occurs. 

Likewise, life insurance is a smart investment especially if you have children or other dependents. It will set them up for a healthy financial future in the event of your untimely death.

Other Types of Freelancer Insurance

There is a wide range of insurance policies to choose from. The above are some of the most common but there are other more niche policies you may decide on. The right one for you simply rests on what you do day-to-day. 

Speak to your insurance agent or get a quote online and they may suggest commercial auto insurance, special event insurance, business interruption insurance and more.

Freelancers are a one-man show. Make sure you are setting yourself up for success and not a financial burden. Check back in with your insurance broker, as your business continues to grow or if you take on employees. They will revisit your policy to ensure it continues to meet your needs as you continue to tackle more in your career.